AGB 2020.13 - Fastenal (FAST)

Pretty Good Margins and Returns for a Distributor

Subscribe to AGB - One analysis of a good business every two weeks.

Fastenal

Fastenal is one of the largest distributors of industrial and construction supplies globally and leads in the fastener category. The company mainly distributes its supplies to customers through a collection of branches or storefronts. Roughly 15% of the revenues from these branches come from walk in customers and the remaining 85% is from distribution agreements the company has in place with customers. Fastenal uses the branch locations as last mile distribution hubs for each local market.

Fastenal is known for its fasteners, but the company also sells other industrial products to its end customers. Fasteners are the largest category at 34%, but the company also sells Tools 10%, Safety Products 18%, Janitorial Supplies 8%, etc. Over the past 10 years, Fasteners have declined in terms of mix % by 15%, while Safety Products have increased in mix % by 10%. Fasteners tend to have higher margins due to its low value…